Great question — and an important one! Here’s the key principle:

As a sole trader in Australia, your income is taxed based on how much your business earns, not how much money you withdraw.

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💡 What This Means

Action	Taxed?	Why
💰 You earn $80,000 from trading/business	✅ Yes	Income is taxable when earned
🏦 You leave it in the business bank account	✅ Still taxed	Because it’s your income regardless of where it sits
💸 You withdraw $20,000 to your personal account	❌ Not taxed again	It’s just moving your already-taxed money

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🧾 How Tax Works for Sole Traders

• You and your business are legally the same.
• There is no “company” structure — so profits belong to you as soon as earned.
• You report all income and expenses on your individual tax return using your TFN.
• You can’t defer tax by leaving money in the business account.

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✅ Example

You earn $100,000 gross from your trading activity in 2024–25:

Item	Amount
Income	$100,000
Expenses (subscriptions, gear, etc.)	$15,000
Net taxable income	$85,000

You pay tax based on the $85,000 — even if you don’t withdraw a cent.

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🚫 Unlike a Company…

If you had a Pty Ltd company, you could:

• Leave money in the company and pay 25% tax
• Take dividends or salary separately

But as a sole trader, all profit is your income, no matter where the money physically is.

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✅ What You Can Do:

• Use your business account to track business income/expenses clearly
• Withdraw as needed without worrying about “double tax”
• Save or reinvest profit — but don’t expect that to defer tax